North Chicago-based Abbott sued Takeda in 2005, claiming Takeda is overcharging TAP by at least $200 million a year for the main ingredient in TAP's blockbuster ulcer drug Prevacid. Abbott claims that's cutting into $100 million in annual profits. (TAP contributed $475 million to Abbott's net income in 2006).

In backing a federal court decision made last year, the U.S. 7th Circuit Court of Appeals cited a 1985 agreement between the two firms, which stated that any lawsuit filed by Abbott against Takeda must be brought in Japan.

"When it signed the 1985 agreement, Abbott could and no doubt did consider the potential inconvenience of litigating in Japan, but decided to risk it," the appellate court's decision states. "It is bound by its choice."

An Abbott spokesman did not immediately return a call for comment Thursday.

The lawsuit has strained relations between the firms at a time when both have signaled interest in a sale of Abbott's portion of TAP to Takeda. The companies have discussed such a deal for years.

Abbott CEO Miles D. White said during a conference call last month that "the atmosphere is right if we can come to agreement on structure" of how the two firms would unwind the TAP venture.

When asked last week about the possibility of a deal with Abbott on TAP, Takeda President Yasuchika Hasegawa said: "The gap between what we desire and reality is too big. Still, I can say that we are able to talk more frankly with Abbott management now than we have been able to in the past," Reuters reported.